Gillard, Swan urge G20 to adopt pro-growth tactics

Julia Gillard
and
Wayne Swan
have written to their G20 counterparts before this week’s summit calling for a medium-term global pro-growth strategy and financial measures to restore the health of the euro zone financial sector.

The G20 meeting in Mexico is expected to be dominated by the euro zone’s problems and their impact on the global economy’s fragile recovery, amid a Greek election that could trigger a fresh crisis.

The Prime Minister will urge the leaders to take decisive and immediate steps to clear the uncertainty putting global recovery at risk.

The letter calls on European leaders to act now to restore the health of the region’s financial sector, including steps to ensure greater banking integration, spending contraints and a medium- term focus on growth and jobs.

Ms Gillard will miss Parliament to attend the G20 summit and the United Nations Earth Summit in Rio de Janeiro.

With two weeks to go until the carbon price is introduced and after the announcement of an expanded marine parks system, a row has broken out between the opposition and the government over Environment Minister
Tony Burke
’s attendance at the Rio summit.

Mr Burke says the opposition is denying him a parliamentary voting pair so he can attend the summit, but the opposition says he can miss one day of the eight-day meeting as Ms Gillard is also attending it.

The opposition would give Mr Burke a pair after question time tomorrow to attend the Rio summit, opposition climate spokesman
Greg Hunt
said.

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Opposition foreign affairs spokeswoman
Julie Bishop
said the elections in Greece would overshadow the G20 summit.

“Whoever wins in Greece will want to renegotiate the bailout conditions but [German Chancellor]
Angela Merkel
has said that Greece must abide by the deal," Ms Bishop said.

The letter from Ms Gillard and Mr Swan says the euro zone public debt and financial crisis is “clearly the major immediate risk to the global recovery".

They acknowledge that euro area governments and the European Central Bank have taken significant steps since the Cannes G20 summit, but call for further immediate action.

“A positive step would be the commitment to move towards a more integrated banking system involving euro-zone-wide regulatory and supervisory oversight and deposit insurance," the letter says.

Though Ms Gillard and Mr Swan say solutions to the euro zone crisis must come from Europe, they add that all G20 countries can contribute to boosting prospects for economic growth worldwide with medium-term expansionary policies alongside plans to ensure fiscal sustainability.

“While the overall short-term pace of fiscal consolidation will need to vary according to country circumstances, spending and taxation decisions can still be calibrated towards supporting growth," the letter says.

Such a growth strategy could include commitments to open up competition for global trade in services and a targeted approach to welfare entitlements that enhance productivity and improve incentives to work, it adds.

Ms Gillard and Mr Swan say Australia has recently agreed to contribute to increase the International Monetary Fund’s global financial support system.

The Lowy Institute’s Mark Thirlwell said the euro zone’s financial problems were a huge risk overshadowing the global economy.

“The G20 meeting will be a test of the grouping’s ability to show leadership and to reassure financial markets in the face of the challenges posed by Greece and the euro zone problems," he said.